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December 31, 2020 7:03 am
Most of us have financial goals. Even if we don't give them much thought. Maybe you like to get out of the door open and on array.
Those are all great but have you asked God about his goals for you. Setting faith, natural goals, that's Our Topic Today Was Dr., West welcomes came from advisers. Cofounder Ron to help us set a firmer foundation for our financial planning.
Then we can some calls from all across the country. However, edition of the program is not life. We are, I'm Steve Moore moneywise live with Rob West, Ron Ron e-books that help us apply God's financial principles to our lives and today were looking at. Master your money a step-by-step plan for experiencing financial contentment and specifically how to increase our chances of achieving our financial goals. We just recommend this book highly to those listening today. This book alongside of course God's word. First and foremost has had a profound impact on my view of faith and finance and I think everyone would benefit from reading it.
I really can't wait to dive in, especially at this time of year when so many people are thinking about goals, but perhaps not. From this perspective, run great to have you here now. It's always good to be rerouted by the way, happy new year. You have obviously years of experience helping folks reach their financial objectives. What I love about what you bring to the table. Ron is not only have you thought and written about this deeply, but you were able to see God's principles of finance worked out in a professional setting. Throughout your career. Yeah right.
Always set my number. I would talk to somebody that if you aim at nothing, you'll hit it every time and I think there's four reasons why we need to set goals one they give us direction and purpose of their Finish Line's there something that we are in our mind, consciously headed toward. Secondly, they help to crystallize our thinking about what we really want to accomplish and later on in this want to talk about some faith goals that I set 40 some years ago.
Okay thirdly they give us motivation when we set a goal. All of a sudden we're moving and my mentor Dr. Hendrick said that resurrection is difficult at any level.
So we need to get up and and forth is that because it's a goal is future oriented and only God is in the future. It's a statement of God's will for my life. So go search for reasons to set goals that are practical and pretty obvious in an extraordinarily helpful if we got no further than that, yes, but I think it's really important that I draw the distinction between a faith goal and what we think of. Typically, when we perhaps enter into a secular view of goal setting, while faith goal is driven by the process. Anybody can set goals all kinds of books have been written for years on goalsetting, but a faith goal really begins with the question God, what would you have me to do and you ask him that question and begin to crystallize your thinking by writing it down and ultimately you come to the position that you can say I believe that God would have me do this.
Whatever this is, we really need a process for that and other process I use is I journal a lot and I keep journaling I keep journaling and I keep praying and I keep journaling and eventually I come to conclusions that I believe this is what God would have me to do the direction he would have me to go obviously if you're in a process of journaling and praying those goals may change over time is in the true oh, absolutely.
I think that in many cases, the goals that we don't achieve teach us something so goalsetting is not magical and it's not something that every believer does, but I think it provides motivation as it mentioned, but I guess it conducted a statement made earlier if I am in ethanol headed over time. So I start out aiming at something that that something may change due to circumstances driven by what God has done run you been at this a long time and you've obviously run many successful organizations including financial planning, organization, and yet I would imagine as relates deep in your finances. You and Judy are still setting goals that we set goals.
We actually a financial plan is a goal. So when you prepare a financial plan. Whatever that might be your in effect saying this is what I believe God would have me to do in certain settings.
You will get into the process and much more about faith, goal setting, right around us right off their teacher and all-around good guy, rambling with us today on moneywise live Rob West, your host, I'm Steve Moore were prerecorded because of the holiday so we won't be taking calls but will be back with more from Ron blue in just one day need some advice questions about planning for retirement. Long-term care insurance. I don't know where to start. It sounds like you need to moneywise Help you find those answers and you can ask your questions and access helpful articles and moneywise podcasts sounds great many okay searching for moneywise and Christian healthcare ministries enables believers to show love for one another by sharing each other's health costs through CHN's voluntary health cost-sharing programs members uplift each other spiritually and financially. CHN was an eligible option under the affordable care act and a Better Business Bureau accredited charity interested.
Learn more by calling 800-791-6225 or online at CH ministries.more bills that require in order to keep using this or not. Fortunately, the gospel authors Robert and Nancy while Demuth occurred in many life stories. They all point same God's hand we see in everything so we can trust him right it's encouragement you need to control our lives to be written for his glory. You can trust God to write your story by Robert and Nancy will your copy today.
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Let me recommend master your money a step-by-step experiencing financial contentment written by our author Ron blue you'll find that book and others when you visit our website which is moneywise live.org that's moneywise live.run great to have you with us today as we talk about setting faith financial goals and this is something that all of us should be thinking about as you said, we really can't achieve what God has for us in this area of finances. If were not thinking about and planning for what were doing with God's money and that's why having a process understanding what goalsetting is all about and really leaning into it and if you're married as a couple is really key. Let's talk about that just for a moment as husband and wife. It's really important to do this together right that really is there something called goal incongruity and that is where he has one set of goals and she has another set of goals and if they haven't come together as a couple around the goals Thursday opportunity for conflict. For one thing, but also you'll never accomplish as much by yourself. As you can with a spouse. And when you quote my mentor again Dr. Hendrix. He said God did not give your spouse to frustrate you, but to complete you. So men and women think differently, husband and wife think differently. For many reasons. So coming around a set of goals or a cold is really an important thing.
I love it all right. Let's talk about why more people don't set faith goals, you know we said it's really important and yet so many fail to do it that you have some observations as to why that might be yeah infected is risen as my quiet time this morning. Paul said forgetting what lies behind and in Isaiah. It says don't cling to things of the past. So the first thing to not do is to look at the past and say I can't because and the second thing is to remember that God says I can do more than you can think, ask or even imagine. So when you're setting a goal you don't feel yourself constrained by circumstances if you will you say to God, what would you have me to do so I don't look at the past and the sense of relying on the past because I want the future to be different and secondly I got to continue to remember that God does things in a way bigger than what I can ever ever think and then third River. I talked about is never set a goal apart from your spouse. So those it's just kinda three things not to do when you're setting goals without fear of failure.
Obviously, as you work with folks and have for many years in a financial planning and investment context.
You know when we set goals, we run the risk of not achieving them. And perhaps it's easier in some context just to say I'm not going to do it.
Well that's true but if you think about the logic of what you said just now that if I die if I don't set a goal. I can't fail. Okay, well, our goal is always a statement of God's will. So you can't fail. Okay, if you're saying the process is what would God have me to do and I set that goal, then he may change it, but I haven't failed. He has just guided me that's a good word by the way, I tried not to think about the logic of what I say often is a great word. Let's talk about the process of setting faith financial goals because if we convince folks and I hope we have that this is really important and we get past some of those obstacles than really having a process that you can lean into helps to make it more manageable. More something you can really accomplish to walk us through that you just said something really important. Even though the logic of the thing that is important is that the goal that we set is God's goals are from not spending time with him. I'm never going to be able to set a goal.
Secondly, you record your impressions as you go through journaling are setting the goals you know Judy and I used to take when kids are young, two weekends a year where we would go away and Saturday morning of the weekend we would go into separate rooms and we would write down all of the things that we wanted to talk about and what goals we wanted to set and then we spent the afternoon comparing our list and what we found is that we were congruent and about 85% of the cases, and 15% not an extra conflict came and that's where the growth came and my life changed after every one of those weekends of setting a goal with my wife.
That was a goals built on prayer of what we thought God would have us to do so at last I like to say on a goal. It needs to be specific, because if it's not measurable in some way. It's not really a goal I could say for example I want to be a good father. Well, I do. That's a purpose statement is not a goal but I coming out of those weekends.
Judy and I had I set a goal that I would take each child out to breakfast once a week we have five so we started with the oldest and I took her out once a week for breakfast and then the second one when she went to college second and the third one the fourth of and we got to the fifth when recital is no need to take him out to breakfast because he's the only one home now until he said dad could we go to breakfast and a lot of the time when we went to breakfast together, it would be just grunting it usually at each other like males as opposed to any really deep theological discussions, it was torture day look like today Michael will not forget her. I don't know and then back to the bank and after several years of that then his new goal became to lose all that weight around a lot when it comes to setting goals. Some people might be frustrated by the fact because I've thought sway in the past that you how can I set a faith financial goal when the target keeps moving the economy keeps changing. Maybe something happens in your personal life, you lose a job and expense comes up, you were planning on so you have to be willing. I guess the flexor to adjust somewhere in the context of glad you asked that question stayed because that is an illustration that I'd forgotten about until you just asked the question and that is that I say set your goals and write them down on the seashore. And don't put them in concrete because circumstances will change, so you put them on the sand and when the waves, for whatever that way might look like you reset so a goal is not something that has to be achieved. It has to give you direction it will change the way you think it will change the things that you do but never ever set a goal in concrete because we don't know what tomorrow is going to bring forth as it says in Scripture. The lower said write them in the sand and then rewrite them again and rewrite them again but have that time in the process of subduing.
It's very good runner about out of time.
Let's finish with one example from your life where you set the faith financial goal or a faith goal that can really help us see this come to life that I had a dramatic example. Just within the last two months, runnable and company. This financial planning firm that I started 40 years ago in November and so there are a lot of forty-year celebrations among the offices of that company. I'm no longer employed by the company are working with that company, but they asked me to come to some of these events and as I was going through my files I found a faith goal setting sheet that I had prepared in August 1979 and there were eight faith goals on that that I hadn't seen in 40 years. All eight of them have been account and they were beyond what you can think or ask or even imagine.
So faith goal God doesn't forget even if I do for a great ride.
Thanks for being with us today.
This is a really important topic and we always thank you, Rob joined the thanks Dave, thank you, Ron, and this is moneywise. And if that is writing you a Freedom and peace of mind.
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You probably have a strategy for your finance your career even your strategy for your getting Christian foundation. Create your family maximize your resources to learn how to minimize network to Deuteronomy chapter 18. I want to reach the 31st 33 context here because God when you already.I'm telling you going to let them free reign where you're concerned use them to teach you that is not the way you want to get the idea behind Babylon. The puffed up against the holiness of God. Here's what I want you to see when it's talking in verse 33. Why is the serpent's deadly poison Culbreth want you to think in terms figuratively speaking here. What were being told here in context. If you are read the whole chapter then you would be knowing it's talking about three against God. The rebellious and idolatrous with streamlined this program to my moneywise live Rob West times more than a little bit before where since we've done an email this one comes to us from Bart says hi Robin Steve, love the show!!! Do you recommend that we give our kids an allowance. This is a great question, Bart and I love beginning to train kids early in how to manage money and that's both the literacy side of how we manage money, give, save and spend really beginning to talk them through all of the mechanics of it but also the biblical side as well because remember, God has a lot to say about managing money and we need to make sure that when our kids leave our homes that they understand God's heart from scripture as it relates to his money.
Starting with the fact that God owns it all and that they are stewards and so I would recommend you pick up a copy of the Howard Beaton's book the ABCs of managing money.
God's way. If you are if you have small children or if there teams, maybe even something like cowards. Book your money counts around lose master your money. So I think that's kind of the starting point in terms of the allowance question Bart.
Here's my approach.
I think the key is that you really want to reward the right behavior. So in our home the way we handle it. As we said okay kids as a part of being in our family, you have certain responsibilities, chores, things that you're expected to do. Keep your bed made and keep your the counter in the bathroom clear and you know we have different jobs they have daily jobs and weekly jobs that they're responsible for and they'll get any money for that. That's just expected. But then there's extra things that they do that they know they can earn some money, and of those are selected intentionally and then we use that money to teach for the young ones give safe spend that there is money that right off the top you want to be systematic and are giving and that we want to save a portion for the something were saving for down the road and then the rest is to spend so I like more of a commission approach which teaches the value of hard work versus an allowance approach, which just says we give you an automatic amount, which by the way, kind of. Is it really the way the real world works, but I think the key is we want to get money into their hands and appropriate ways we can teach. Last thing I'll say is remember modeling is always the best of you spend with the budget and you talk about handling money. God's way, it will rub off on them.
Over time, and does Mrs. West give you an allowance very little. Very and we appreciate that is another. It's from James, he says, is there a rule of thumb for when I should drop comprehensive coverage on a vehicle and go to liability coverage only. We have two cars.
One has liability only because I bought it with hail damage. The other is a 13-year-old specific, with over 150,000 miles that one has comprehensive and if we canceled that it would provide needed breathing room in our budget.
Yeah, great question, James and I can certainly understand wanting to free up some expenses if possible let you know the rule of thumb, and that's all it is, but the rule of thumb for dropping collision insurance at least one of them is to drop it when a cars collision premium plus the deductible so the collision portion of the premium plus the deductible costs more than 10% of the cars value over a 12 month period. Great question. If you have an email send along firstname.lastname@example.org all right. Let's go to Springfield Missouri now understand how can we help you today. I'm way fun for my requirement on are going to be for man to man to target attribute from and I Time to do this but I guess my question is one of the difference between an IRA and by an annuity and the second part of the question is when I'm 70. A lot of them also have the option rollover the IRA and something else or out of network. 1.70 2 1/2 on the mandatory withdrawal without any more money. Okay, yeah, let's try to tackle these. So basically you've got the type of account stand and then you got the investments inside the account. Let's set the investments aside for second talk about the type of account with an IRA and an annuity. Assuming it's a tax-deferred annuity you're dealing with a basically a tax-deferred instrument where you put money in and it grows tax-deferred, meaning that the taxes are not paid on the profits or the gains inside the account be at an IRA or an annuity which of course generate profits differently just based on the type of investment. The type of account that they are, but you don't pay any taxes on the gains along the way but then as you take money out of an IRA or if you take money out of the tax-deferred annuity then you pay the tax on it as it comes out now big difference between an IRA and an annuity. Even though they're treated similarly from a tax deferral standpoint is the way the money grows inside it, and IRA gives you basically ultimate flexibility in terms of how you want those dollars invested while their growing versus an annuity which would be depending on the type of annuity is either generating a fixed rate of return or some sort of investment options inside the account that are typically called subaccounts where you can either choose from them at a variable annuity and then often there will be a floor or a minimum that you can earn on an annual basis, but they are growing both in a tax-deferred environment and it does that make sense to you following up with that with the IRA. I understand you correctly, then there is more risk, whereas in the annuity because of the different types of annuities you can limit the risk to your principal.
Yes, that that is a true statement with the exception that you are giving up something potential upside return because remember with an IRA you're going to capture 100% of the results of whatever you're invested in with the annuity there's going to be a cost to them, providing that floor if you will, on the returns and that's often a trade-off that you're going to give up some of the upside, so you often people will prefer not to use an insurance product because the returns are not going to be as good in most cases, and fees and expenses are higher.
You have a lot more control with the IRA pastor.
We hope that helps you appreciate your calling it. Thanks very much more moneywise live this.
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California has about 25,000 deaths from coronavirus, the third state to reach that number. New York and Texas have already passed that, according to Johns Hopkins University so falling in southwestern Texas with higher elevations receiving more than 1 foot on Wall Street, the S&P 500 and Dow ended 2020. It record highs, but I'll gain 196 points today. The NASDAQ was up 18. The S&P I had 24 this is SRA news real pleasure to have you with us today. This is moneywise. Love, I'm Steve Moore that other guy was ailing I with the answers. He's Rob Weston were happy to have you on the program are happy to have you with us on the program.
Today, however, we are pre-recorded. We will be taking your calls but we've lined up some calls in advance that I think you'll find interesting, helpful and very very practical. At least we've tried to make them that way so stick around. This is moneywise the let's go directly to our phones Lorena and visit Akron South Carolina help me Lorena given South Carolina.
I'm sorry I read my board incorrectly. What's in your mind. My company percent and then I'm gonna bump it up to 15% this year and then possibly 20% next year and why that might take that that like the 8% and put it into Roth 401(k) or maybe something out okay. Well, these are great questions and I think the first fundamental question is really more philosophical about your goals and objectives and then the second question is a little bit more tactical related to which specific account should receive any contributions you're going to make moving forward.
Is it just the current 401(k) you're investing in or is it some other type of account, meaning if you have the option to also have a Roth 401(k) should you open one of those should you do in a Roth IRA simultaneously and we can deal with that. Secondly, so let's start with the philosophical have you done some planning Lorena to determine first of all, what are your goals and objectives, meaning do you feel like you're living at the lifestyle. God is called you too.
Are you trying to increase it, or perhaps even decrease it.
Do you want to increase your giving. Do you have some savings goals that you've established both short-term and long-term.
And how are you doing on those and then for that big long-term goal that we call retirement. By the way we look at retirement little bit differently.
As believers, that we can get into that some other time. But for that longer-term retirement goal which I like to call financial finish line.
Have you established a number meaning.
Do you know what you're working towards. We don't want to accumulate just for accumulation sake.
We want to prayerfully consider what God has called us to.
And for trying to replace an income what is actually needed based on the fact that Lord willing, will be completely debt-free in whatever lifestyle you feel like he's called you to that you want to be able to maintain recognizing you have various income sources at during that season of life.
Perhaps Social Security and and other sources of income, and then that will help you determine what you're ultimately working toward, and that really does require some planning, so perhaps that's more than you thought of, or maybe not so do tell me a little bit about where you're at in some of that planning will and I are about five and then my 520 by next year I would do that and then get medical benefit. 67.
Packet can be frugal and let off the 401(k) for two years. I am married and have a IRA and both of our income out. I would think that you do that.
My other goal. What were planning on selling our home and land. We purchased the land already and built a house next year and the other questions I had and I get that Dick might affect that's helpful and I think you know you sounds like you have thought about this. I would probably go to the step of you haven't already.
Looking at what will our retirement budget look like based on where you feel like the Lord will have you in that season of life based on what he has you doing and where you be living in all of that and then what is it going to take you to fund that lifestyle and I like this idea that these excess contributions would be used for a couple years while you wait to get the maximum or at least the full amount for your Social Security so I'm on the problem with that as long as I would recommend you do some planning. To that end with a financial planner to make sure you really analyze those numbers in terms of where to put it.
You could certainly bump it up inside the 401(k). I kinda like the idea. If you have the option of a Roth as well of having the Roth alongside the current traditional 401(k) where the bulk of your contributions are getting you getting the tax deduction now in tax-deferred growth but then you also have this other pool of funds where it's after-tax dollars, but it's growing tax-free which is not good to be subject to the required minimum distribution and if tax rates are higher down the road you'll have a growing amount of money for the next 10 years that has already been taxed at what could arguably be some of the lowest tax rates that we've seen, and perhaps will see depending on what happens politically. You know, down the road so I think having these two options is a good idea as to whether or not you should go from 15 all the way up to 20. That's really just a math equation that I would get some help with.
From a financial or retirement planner and all else how to live in the home so I have built my hat draw from his IRA be able to meet the house payment until our house built and then sell our fight now and then take all that and put it on the house that would be pretty almost. We went be debt-free. We went out a whole lot on where you live, you know, I think that's the only source of funds to do that to me and obviously one actually go and sell the property and perhaps you'd you rented back from the new owner or move to something smaller temporarily while you build that's going to avoid you having to carry two mortgages apart from that. Is there another source of funds. You can draw from.
If you just really feel like you want to stay in only move once I realize it takes a while to build a home from scratch so you know, again, it all comes back to the planning and does this make sense on paper, but I don't have anything philosophically wrong with what you're describing in terms of pulling from your husband's account. Given that you not to be paying the penalty, but you do have to factor in the added taxes Lorena were glad that you got through today. Thank you very much we appreciate your call. Alex and Arlene. We are coming your way.
Please hang in there with this Rob we have an email question. We haven't done an email and while this one comes from Charlie he says dear Rob and Steve.
We've been married for 16 years and not good at managing money. We live paycheck to paycheck.
Whenever we put ourselves on the budget expenses come out of nowhere. I don't want to complain and I do know that God provides.
But what are we to do. Yeah well Charlie. I think this is probably coming down to your budget not being an accurate reflection of reality. Listen, we all know that the unexpected comes the key is, are these truly unexpected expenses or are they expenses we should have anticipated.
They just don't come every month when somebody doesn't send us a bill necessarily, so I go back to work on that budget and really take a hard look at what should we be putting away. You know, we should be putting away 1% of the value of the home. Every year in a maintenance that because we know homes have wear and tear, and they're gonna break down and so therefore we need to have a fund that's being replenished for us to take care of that routine maintenance or perhaps not even routine maintenance. We need to be setting aside money for auto repair.
Assuming we don't have a a warranty in place and even if we do we still gotta replace the tires and the brakes and make sure to keep the oil changed.
We got anticipate quarterly payments to insurance and homeowners Association to take another look at that budget. Make sure everything is in their and I think you have a different experience. Next time more moneywise I was Rob West. After this theory I need some help. Sometimes I feel like I can't get a handle on my money. I mean, where does it all go. It sounds like you need to moneywise Help you train your content and track your spending three dollars you spend every morning on coffee every morning. Also get access to free difficult financial advice sounds awesome. Let's do it.
Okay, searching for moneywise any abstract moneywise.org. Here's a great deal more about our money than most of us imagine anything. Jesus says more about our use of money and possessions and about anything else, including both heaven and hell in managing God's money, author Randy Alcorn breaks it all down in a simple and easy to follow format that makes it the perfect reference tool if you're interested in gaining a solid biblical understanding of money, possessions and eternity managing God's money is available in the store moneywise. I.org this is a very hard guy and I'm here to help you understand God's purpose for your life to the eyes of a claimant with the new year comes the inevitable result to hit the gym and please more often than last year's reading that book that's been sitting on the shelf way too long. My new diet a new hairdo way. It's the same versus last year a result, we were convinced of, well, kind of, sort of at the time, I will begin changing that kind of resolution Jamaican if you're a Christian, but a New Year's resolution to not only changes your life but the lives of everyone you meet at Shane's at last for eternity. Here's the resolution move everyone under influence today and everyday closer to Jesus and everything you say and do. That's a resolution worth making and keeping your job is revival outside the walls. By moving everyone every day closer to Jesus. If you need help doing that. Go to RRT W.com. Most of us are Bible study genes. That's why Moody publishers created the everyday Bible commentary series Dan utilizing Romans. In Revelation, every common area bringing important historical background insights from the original language help with difficult messages every day.
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We previously recorded. Thanks so much for being with us today and we hope will stick around and enjoy the rest of the program. So let's begin. Rob, we have about 89 minutes or less, put the pedal to the metal and CME calls we can tackle. I like my right Lafayette, Indiana, Alex.
You're on my friend.
How can we help our network allocate the right weight goal. I picked up about $8000 loan it really only debt thinking that we wanted with saving and then kind of go from there. Saving for a moment that school in a couple of years.would be to put more toward saving Brett home and then pay off the loan kind that we go we're not kind when you get back on that now. It's what are your monthly expenses. If you don't mind me asking, roughly right around probably okay so 3500 if we said we wanted to try to hang on to three months expenses.
We need about 10 five you'd be right there and then what did you see is that the balance was about 18,000 you have about 40,000 that right liquid for me this is a no-brainer. I died knock that out. Go ahead and completely eliminate the student loans be done with that you still got more than half your money available.
You've got basically six months expenses at that point. Plus you're now adding back into the budget.
The amount you were sending to the student loans your debt free and you can really begin aggressively moving toward your next goal, which sounds like I might be saving for the down payment. I realize this perhaps could delay slightly.
The purchase of the home because we want you to have 20% and not have a mortgage of more than were your PI TI's more than 25% of your take-home but I think you can have a lot more peace of mind knowing that your out of debt you not get a string this out and pay a lot interest, you're guaranteed. The return equivalent to the interest rate you are paying and I just I think as a young couple. It's a great place to be.
Alex, thank you very much Indianapolis next Arlene what you question for Bob you're not late to consolidate my daughter had to have parent plus font as well as small amount that she was able to take out and she is currently paying us that she would really like to relate to consolidate the parent plus loan with her loan in order to have one payment rather than to large payments every month.
Is there a way to even accomplish that. Or are we just in the first Arlene are you trying to accomplish the simplification of the payment. Are you trying to take your name off of the loan. I want to have our name into her on and she is currently putting money in our account every month and making a payment for her but she would really essentially like to have it all in her name to consolidate all for one, one payment and that's what's can be challenging. You know you can't transfer the parent plus loan to a student if you borrow a parent plus loan for your child's education. You're the one legally responsible for repaying the debt.
Really the only thing that could be done is to in a sense refinance the loan in her name by taking out a new private loan in that amount and is since innocence paying off the parent plus loan. Not all private lenders will do that to approve a type of refinancing and have to check around.
The downside is, of course, you'll have to qualify for that new loan on her own, which could be challenging based on her credit score and income and so forth.
Given that she's just starting out and she'll give up the protections afforded through the federal loan program which includes not only the loan forgiveness programs, but more importantly, if you get into a situation where you needed the income contingent repayment caps where you have the ability to pay less, based on a hardship in and as a percentage of income so unfortunately she's gonna have to probably stay with these. The good news is she can continue to pay them if that was your agreement as if there her own but refinancing and getting them out of your name is is going to be difficult. The parent plus loans can be consolidated through federal direct consolidation loan, but that's still going to have you is ultimately responsible as the responsible party and hope that helps. Though Arlene. We appreciate your call today. Thanks very much down to Miami Miami, Florida hello John what you question today for Rob West. How are you good job. Thanks for going.
I went by my score model model eight yes and so my documents to like three different vendors and like on the second lender now they use the same 15 saw him coming back at 616 you asked me about buying point and I tell you I am just so lost about don't want a list of coding, the fine point because I was trying to get in the subsidy didn't and that will help with the down payment, closing yeah and okay so yeah he's not talking about buying up your credit score he's talking about buying down the interest rate is at right. It would be that these are called discount points John and basically you can in the sense on the front end by a lower interest rate for your mortgage. It's basically a form of prepaid interest so you know when you turn first take out the loan. You can lower your monthly payment and the overall cost of borrowing through discount points, which is 1% of your loan. You know I think if if in your situation really you have limited resources, I think the key for you is to shop around.
Get the very best rate you can if you have the ability to buy it down. You certainly could explore that but I want to make sure you have at least 20% in the form of equity before you're buying down the interest rate because that's money that you're not going to have toward principal and I want to make sure you have good equity in the home so I probably in your situation. Not as big of a fan of that option as I am you just trying to qualify for the very best loan you can recognize, and you can refinance down the road if for some reason your credit score improves. Now if you had the resources available, you still do the 20% down payment and you can buy that point down the points that will sure that's gonna save you money over the long haul because that's a lower interest rate you're paying on for the life of the loan. That's never a bad thing, but I want to make sure you at least a 20% down payment and hey John thanks for going good to speak with you again buddy got bless thanks so much and we might be able to squeeze in one more Dalton, Illinois Anthony, how can we helps her.
Thank you. All right God bless you and H program follows good thing. Thank you because God's really been on me, so to speak. The Holy Spirit been on me to give my credit in order and I rated their staff to try to get this give my credit my credit in order.
I am at right now with the experience and still learning about credit, but I imagine experience D or from what I've think I figured out the spirit is like to hear dog of the so to speak. Credit if if you have any late payments. Like I have I accumulated approximately maybe 14. Late payments on my mortgage and honest when I was kind of struggling with my finances, but I'm back on track in this April I'll be coming up to two years of on-time payments, but my score is still at 603 and try to figure out how to go about improvement because when I apply for credit card credit card. Imagine a go about it. Credit score with the late payments and I get a rejection credit and I contacted my mortgage company have done it already. I wrote the letter and they sit back and said that they could not take the late payments off yeah yeah well let me give you some counsel here Anthony.
I appreciate your call Fortson were up against the end of the programs. First of all, you know, I think you're doing the right things in the sense that you know clearly that you've been two years of on-time payments in your repayment history makes up the largest percentage of that scores of the extent to which you are in on time payer every month. Moving forward is a really good thing that your payment history then it's your amounts owed. Do you have balances that you're carrying higher than 30% of the overall credit you have available. That's what called your credit utilization.
That's 30% of your score.
Then the length of your credit history.
How long have your accounts been open and then there's new credit, meaning the inquiries you have and then your credit mix. What type of of credit do you have extended to you the end of the day what you need to focus on his being on time payer those late payments.
If they're accurate, there's nothing you can do about it. Don't buy into this. You know this trap or scam where people can tell you you Pam some money to get this stuff taken off. It's just not possible. Fair credit reporting act says if it's accurate, it stays for seven years, but as it gets further and further in the past.
It will impact you least and the other thing is I'm not really crazy about you having a credit card right now I'd rather you if you need one. Go get a secured credit card at your bank. So stay the course and being on time payer and you'll see that score come up over time, Anthony. We do appreciate your call.
Thank you so very much and Rob. Speaking of time getting the better of us were about ready to close out the year honey.
Final thoughts that's exactly right.
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